Federal law prohibits a company from paying a competitor to stay out of the market, and the Federal Trade Commission (FTC) challenged the Solvay deal as an illegal anti-competitive move. The legal question in this case is whether reverse-payment agreements are always anti-competitive and unlawful, or whether they are “per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud,” says the petition for a writ of certiorari filed with the Supreme Court.

Arguments begin March 25, 2013, and anyone interested in the lower court opinions should check out the case page on scotusblog.com.

Such large potential losses might be one reason why reverse-payment settlements increased from 28 in 2011 to 40 in 2012, according to a recent FTC report. We might expect to see more such settlements as a slew of drug patents expire in the next few years. The FTC projects drug consumers pay $3.5 billion more each year as a result of pay-for-delay settlements.

The Drug Price Competition and Patent Term Restoration Act of 1984, or Hatch-Waxman Act, made it easier for generics to enter the market, in part by making FDA generic drug approval less onerous. As a result, generic drug use in the U.S. rose from 19 percent in 1984 to 78 percent and rising today.

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The Piper Report blog on healthcare business and policy covers issues in Medicaid, Medicare, and the Affordable Care Act, with articles, interviews, resources, primers, book reviews, and more. Edited by Kip Piper, MA, FACHE.